Adewale-Smatt Oyerinde is the director-general of the Nigeria Employers’ Consultative Association (NECA). In this exclusive interview with BusinessDay’s Joshua Bassey, he maintains that the government should consider short-term interventions to ease high fuel prices without returning to subsidies, while investing in public transport, CNG, electric vehicles and renewable energy for sustainable long-term solutions.
What is your take on the federal government’s 30-day discount fuel sales and the idea around capping ex-ganprices?
Energy, particularly petrol, has become central to our national development. In fact, the demand for petrol is almost inelastic. This means that, irrespective of the price, if you want to drive your car, you must buy petrol. Your distance will not be shortened simply because the price has increased. If you live on the mainland in Lagos and work on the island, for instance, the distance you travel will remain the same. You cannot simply reduce the distance or significantly conserve fuel without changing your travel arrangements. That is how critical products with relatively inelastic demand can be.
Given our current circumstances, the situation requires some form of response. Such responses can be conventional or unconventional. The most important consideration is that Nigerians are feeling the impact of high energy costs. Businesses are also feeling the pressure, and, in fact, the situation is even worse for them.
Therefore, any short-term intervention that does not take us back to the old subsidy regime is worth considering. We need to find a lasting solution to the problem of high petrol prices and our dependence on fossil fuels. As many have suggested, renewable energy and compressed natural gas (CNG)-powered buses are alternatives worth exploring.
On the idea of the NNPC selling petrol at an ex-gantry price of N1,350 per litre, if the government believes that such an intervention, regardless of its timing, will reduce the hardship Nigerians are experiencing, then it is appropriate as a short-term measure. The question is whether these interventions are designed to reduce the pressure on Nigerians. If they are, then we consider them appropriate in the short term.
However, we must develop a sustainable, long-term solution that is flexible and adaptable. We also know that Nigeria does not control the global oil market. Developments in the international market can significantly affect domestic fuel prices.
Until recently, many Nigerians did not fully appreciate the strategic importance of the Strait of Hormuz. We have now realised that developments around that waterway can significantly affect global oil markets and, consequently, fuel prices in Nigeria.
We therefore need to address the immediate challenges while developing a long-term plan to reduce our dependence on oil.
The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, has indicated that discount intervention would initially last for one month, while some stakeholders have suggested six months. We must determine the most appropriate duration and develop a sustainable plan.
Whatever proposal is adopted, it should be assessed in terms of its sustainability and its ability to reduce the pressure on Nigerians and businesses. However, we do not believe that returning to the old fuel subsidy regime is the right approach.
What would you propose as a long-term solution?
Let me begin with the short-term measures. Our position has been that the fact that Nigeria produces crude oil should count for something for Nigerians. We cannot continuously justify domestic fuel prices solely by reference to international market prices.
The benefit of our crude oil resources should be reflected in the prices Nigerians pay. One option is to sell petroleum products at cost price, without the NNPC making excessive profits. Selling at cost price does not necessarily amount to subsidisation. It could simply mean making petroleum products available to Nigerians at the cost of production and supply.
However, the downside is that we must address smuggling. If fuel is sold in Nigeria at a price lower than the price in neighbouring countries, we create an incentive for smugglers to transport it across the borders for resale.
These are variables that must be carefully considered. We must determine which intervention carries the least risk.
Returning to subsidies could encourage smuggling, while failing to reduce fuel prices would leave Nigerians exposed to the effects of high energy costs. We must therefore determine which option offers the greatest benefit while minimising the risks.
In the long term, we need to expand our public transportation system and promote the use of CNG-powered buses, CNG-powered cars and electric vehicles. These are sustainable alternatives that Nigerians can gradually adopt.
We must also promote renewable energy, including solar power, to reduce dependence on the national electricity grid and petrol-powered generators.
Furthermore, we should establish the right institutions and create incentives for manufacturers and producers of solar panels and batteries to establish production facilities in Nigeria. This will help reduce our dependence on imported energy equipment and make alternative energy solutions more affordable for ordinary Nigerians.
Inflation eased in September; how much relief does the latest inflation trend offer businesses and employers?
We commend the Central Bank of Nigeria (CBN) for the stability achieved. From the figures we have seen, the inflation rate is gradually declining rather than rising at the pace previously experienced.
However, as economists have rightly observed, macroeconomic stability that does not translate into improvements at the microeconomic level will remain an illusion for the ordinary Nigerian.
While the government has made progress in arresting the macroeconomic deterioration it inherited, there is an urgent need to ensure that these gains translate into tangible improvements in people’s lives.
The average Nigerian is more concerned about what happens in the market than about macroeconomic statistics. Workers are feeling the pressure because their disposable income is often exhausted before they even get home. A declining inflation rate is welcome news, but Nigerians need to experience its benefits directly.
The figures are useful to the government and policymakers, but the average Nigerian needs to see the impact on the prices of goods and services.
Also, we cannot sustainably reduce inflation without addressing the challenges confronting organised businesses. From basic economic principles, inflation involves a sustained increase in the prices of goods and services. One of the major factors driving these increases is the cost of production, including the cost of inputs, energy, transportation and regulatory compliance. We must therefore address the various costs businesses incur.
It is encouraging that there appears to be some improvement in the tax environment. The Minister of Finance and Coordinating Minister of the Economy has been working to support organised businesses and address revenue leakages.
However, as we implement the new tax laws, we must also address inconsistencies arising from the laws governing certain government agencies. Some agencies have enabling laws that allow them to impose or increase charges independently. This can create contradictions when an overarching tax framework seeks to establish a more consistent system.
We cannot have a comprehensive tax law prescribing the taxes payable while other agencies rely on their existing laws to impose additional charges or increase their levies. These inconsistencies must be addressed.
More fundamentally, we must tackle the underlying causes of inflation and reduce the cost of doing business.
When businesses become stable, sustainable and competitive, they can expand their operations and create jobs. They will also generate more revenue and pay company income tax.
Newly employed workers will pay personal income tax through the Pay-As-You-Earn (PAYE) system, while state governments will benefit from increased PAYE revenue.
As workers earn more, their purchasing power improves. This benefits landlords, food vendors, school proprietors and other businesses because more money circulates through the economy.
For instance, a landlord who receives rent can spend that money at a food vendor’s stall. The food vendor can then use the proceeds to pay school fees, benefiting the school proprietor. The money continues to circulate throughout the economy.
By addressing one critical issue like the cost of doing business, we can generate several positive outcomes, including increased employment, higher government revenue and improved household welfare.
Employment can also help reduce the vulnerability of young people to criminal activities and insecurity by providing them with legitimate economic opportunities.
The government must therefore identify and prioritise measures that deliver the greatest benefits across the economy.
One of its most important priorities should be reducing the cost of living and the cost of doing business. These issues are central to the welfare of Nigerians and the sustainability of businesses.
Overall, I believe Nigeria should aim for a single-digit inflation rate. We should establish clear, measurable targets and work progressively towards achieving them. It is encouraging that inflation has begun to decline, but we must ensure that the trend continues over the coming months and years until we achieve single-digit inflation.
What are NECA’s major concerns about the impact of the 2027 elections on business confidence, investment and economic stability?
First, we want to appeal to political leaders to ensure that governance continues between now and the elections. Politicians should not allow governance to grind to a halt because of electioneering activities.
Second, the progress we have made in achieving some level of economic stability must not be sacrificed on the altar of political patronage.
For instance, we have witnessed some degree of stability in the foreign exchange market, although the naira is still not at the level we would like it to be, with the exchange rate remaining above N1,300 to the dollar.
We must ask ourselves what we have stopped doing that previously made our currency stronger. These are important questions that our leaders should address.
For the organised private sector, we need sustained engagement with regulators to ensure that their policies do not contradict the government’s broader economic objectives.
We must also address the power sector, which remains a major challenge for the current administration. The government made commitments to Nigerians regarding electricity, but the significant improvements people expected have yet to materialise.
Also, the effort to revive Nigeria’s industrial base, including the launch of the National Industrial Policy, must continue. The country’s future progress and economic growth depend significantly on how seriously and consistently we pursue the revival of our industrial base.
These are critical issues that political parties and candidates must address during their campaigns.
One of the most important questions Nigerians should ask politicians during this electioneering period is, ‘What is your strategy for reducing inflation to 10 per cent?’
Politicians should not merely promise to reduce inflation. They must explain the specific measures they intend to implement and the targets they expect to achieve. They should also explain how they intend to address the persistent problem of insecurity.
These are the issues Nigerians should demand answers to during the election campaign. Otherwise, we risk continuing the same cycle of promises without meaningful progress.
The organised labour and the government recently clashed over the minimum wage. Labour is seeking immediate action, while the government says a review before June 2027 would be premature and inconsistent with the law. As a member of the tripartite framework, what is NECA’s position?
The discussion about the national minimum wage is quite interesting, and we have refrained from jumping into the debate prematurely.
There is an established process for negotiating the national minimum wage, and it rests on tripartite engagement involving government, organised labour and employers.
Sometimes, we become concerned when two of the three parties meet and engage in discussions with the expectation that their decisions will bind the third party. For us, that is not the way to go.
Labour can demand a new minimum wage, while the government can argue for a change in the timing of negotiations. However, the private sector has its own position.
We are aware that the National Minimum Wage Act was amended three years ago, and we have expressed reservations about the amendment. Our position is that the review period should revert to four years.
The private sector is ready and willing to participate in negotiations whenever the appropriate committee is constituted.
However, our major concern is that the process established under the International Labour Organisation’s (ILO) conventions and standards must be respected.
Regardless of the circumstances, the key considerations must include workers’ needs and those of their families, the country’s economic situation, the capacity of enterprises to pay, and productivity. These factors should determine the outcome of negotiations.
Whether negotiations take place this year or next year, they must be based on these considerations. Reliable data, constructive engagement and consensus will play important roles.
We are relatively comfortable with the situation in many private-sector industries because sectoral groups conduct collective bargaining negotiations periodically, often every two years, during which wages and other employment conditions are reviewed. Consequently, agitation over wages in the private sector is not as pronounced as it is in the public sector.
Increasing the minimum wage may be necessary, but it will not, on its own, resolve Nigeria’s economic problems. The government must also address the underlying macroeconomic challenges and structural bottlenecks.
Even if the minimum wage were increased to N1 million today, workers might still struggle if inflation and the cost of goods and services remained uncontrolled. That amount would not necessarily buy what a much smaller wage could purchase when prices were lower.
We have advised our colleagues in organised labour not to isolate wage negotiations from broader economic issues. Whatever workers earn will be spent in the market, and high prices will continue to erode their purchasing power.
It therefore makes economic sense for all stakeholders to advocate lower inflation, reduced business costs and fewer regulatory bottlenecks.
When these challenges are addressed, the benefits will extend to the production floor and eventually to consumers, as the prices of goods and services gradually become more affordable.
Workers and Nigerians generally will benefit.
Announcing a preferred wage figure before negotiations begin undermines the purpose of collective bargaining. Such figures may reflect the interests of particular groups rather than a balanced outcome that serves the broader economy.
Any agreed figure must take into account workers’ welfare, as well as the capacity of businesses and government to pay. We must bring all parties to the negotiating table and allow the process to produce a workable outcome. Announcing figures prematurely can also create conflict between representatives and their constituencies.
Following the removal of the fuel subsidy, more money has accrued to the federation account, but that alone does not settle the question of what employers and the government can sustainably afford.
My suggestion is that negotiations should commence after the general elections, when there may be greater certainty regarding the direction of governance. Beginning negotiations now could create difficulties for incoming leaders and employers who may be unable to meet the commitments eventually agreed upon.
How does the value of the naira as it stands today, compared with the dollar, address concerns of businesses?
The first thing to understand is that the value of a currency is influenced by demand and supply. When demand for a product exceeds its supply, its price tends to rise. The same principle applies to the naira. We must first address the demand for foreign currency to import goods.
By improving domestic production and increasing capacity utilisation in local industries, we can gradually reduce the demand for dollars.
Similarly, if we strengthen our education and healthcare systems, we can reduce the need for Nigerians to travel abroad for education and medical treatment. This would also reduce the demand for dollars and euros. If we fail to strengthen domestic production, demand for foreign currency will continue to put pressure on the naira.
The government must also create an environment that attracts genuine long-term investors, particularly foreign direct investors, rather than relying excessively on portfolio investment.
We need investors who will establish factories, build businesses and create employment opportunities so that Nigerians can benefit directly from their investments.
If we fail to address these structural issues, our demand for foreign currency will continue to rise, making it difficult to strengthen the naira sustainably.
It is unfortunate that our large population and market potential are not being fully harnessed to build domestic productive capacity, while other countries are benefiting from opportunities that Nigeria could develop at home.
Concerns have been raised that artificial intelligence (AI) could worsen the jobs crisis. What is NECA doing to help employers deploy AI in ways that create jobs and improve productivity?
In the world of work, one development we cannot wish away is the emergence of artificial intelligence. The labour market may leave some people behind, and individuals must take steps to ensure that they are not among those left behind.
Years of professional experience combined with knowledge of AI give an individual an advantage over someone who has AI knowledge but lacks practical experience.
You may know how to use AI tools to generate results, but when you combine that knowledge with professional experience, you gain a significant advantage. The implication is that every individual must take personal responsibility for continuous learning and professional development to remain relevant.
As businesses face increasing competition and scarce resources, employers will continue to seek ways to reduce costs and improve efficiency. They will therefore adopt technologies that enable them to produce more at lower costs.
Employees must ensure that they are not left behind. They should learn to use these technologies to improve their skills, productivity and overall efficiency.
No employee can assume that their position is indispensable without continually improving their value to the organisation.
We partner with the Industrial Training Fund (ITF) to provide free AI training for young Nigerians.
The International Monetary Fund (IMF) has also raised concerns about the potential impact of AI on employment. However, the reality is that workers must prepare for the changes taking place.
Where businesses lack the resources to retrain their employees, individuals must also take responsibility for upgrading their skills.
It is not sufficient to argue that workforce development is solely the responsibility of employers or the government. Everyone has a role to play in developing skills, sustaining businesses and promoting national development.
Do you see any role the government can play in the way AI is deployed?
The government can establish an appropriate policy and regulatory framework. However, we must be careful to ensure that such a framework is broad enough to accommodate the different dimensions of AI adoption across the economy.
Our advice is that the government should provide the right legal and governance framework without unnecessarily stifling innovation or business operations. The framework should offer clear guidance on the use of AI while preventing problems that could arise from irresponsible or inappropriate applications.
However, whether such a framework can protect jobs is a separate question.
The government must recognise that businesses need sufficient discretion to determine the AI tools and technologies that best suit their operations, provided their use complies with the applicable legal and regulatory requirements.
The objective should be to encourage responsible innovation, improve productivity and support business competitiveness without imposing unnecessary restrictions on enterprises.
Given that the quality of education directly affects the future workforce, what fundamental changes do you think are required to bridge Nigeria’s skills gap?
Public schools in Nigeria are becoming less attractive because of inadequate basic infrastructure. This reflects serious shortcomings in the provision and maintenance of educational facilities, for which state and local governments have significant responsibilities.
The situation has also created opportunities for private school owners to charge increasingly high fees. An uneducated population poses a serious risk to society because people without access to education and economic opportunities can become more vulnerable to social instability and violence.
This is a major challenge that requires urgent attention.
Within the private sector, businesses have had to establish their own training structures to develop the skills they need. These include graduate trainee programmes, technical training centres and vocational development programmes.
In many cases, companies are training their employees because the wider education system has not adequately prepared graduates for the workplace. Nigeria needs a national policy that ensures children are enrolled in school and that those who are out of school are brought into the education system.
Unfortunately, politicians do not always treat this issue with the urgency it deserves, even though the consequences of failing to address it are alarming.
Our emphasis should be on skills development. And so, we advocate a dual education system that combines classroom learning with practical vocational training. Under such a system, pupils and students could spend three days a week in the classroom and the remaining two days acquiring practical skills within an organised training structure.
This arrangement could continue through secondary school or college, allowing students to graduate with academic qualifications and practical experience.
By the time they complete their education, they would have acquired relevant skills and workplace experience, reducing the gap between education and employment.
The government should establish a regulated framework to ensure that the system is properly monitored and that the training meets recognised standards.
Industry should play an active role by providing practical training opportunities and, where appropriate, stipends to support participating students.
This would help produce well-rounded professionals who are academically competent, technically skilled and better prepared for independent living.
Our concern as private-sector operators is straightforward: if the necessary skills are not developed today, who will operate and sustain our industries in the years ahead?
Your members have been accused of labour casualisation and abuse of workers’ rights. How are you addressing this?
Casualisation will remain a problem if the institutions responsible for addressing it fail to perform their duties effectively.
We do not support the casualisation of workers, but we support legitimate outsourcing arrangements, which are recognised by the International Labour Organisation (ILO).
One of the challenges is that people often know which organisations engage in improper casualisation but are unwilling to identify them.
The federal ministry of labour has the authority to conduct inspections. The question is whether these inspections are being carried out effectively and consistently.
We should not generalise about all employers. Instead, we should identify and hold accountable any employer found to be engaging in unlawful or improper casualisation.
Workers should report organisations that violate their rights, and such cases should be investigated and addressed appropriately.
In the banking sector, for example, the Central Bank of Nigeria is the regulator, while the Ministry of Labour has responsibilities relating to employment standards and labour regulation. If the relevant regulations exist, why have we not ensured that they are properly implemented and enforced?
We also urge organised labour to sensitise its members about their rights and encourage them to report violations through the appropriate channels.
There have been recent concerns about fake products. How damaging is this to genuine businesses and the economy?
The proliferation of fake products is largely a reflection of weaknesses in regulation and enforcement. For a country as large as Nigeria, regulation must be strategic and targeted. It must not only protect consumers but also create an environment in which legitimate businesses can operate and grow.
Porous and poorly monitored borders make the country vulnerable to smuggling. To address this problem, the government must support legitimate businesses and enable them to produce goods consistently and meet market demand.
Whenever there is a shortfall in supply, unscrupulous individuals may exploit the gap by producing counterfeit goods or importing fake products. These are some of the underlying issues that must be addressed.
As NAFDAC intensifies its raids, seizures and enforcement activities, those involved in illegal production and distribution may become more discreet and develop new ways to evade detection. Enforcement is necessary, but it cannot be the only strategy.
The government must also encourage legitimate manufacturers to increase production and operate efficiently. This would help ensure that genuine products are readily available and make counterfeiting and adulteration less profitable.
Regulators should combine enforcement with public awareness, business support and effective monitoring.
They must also help legitimate businesses understand and comply with regulatory requirements while ensuring that consumers are protected.
We must be careful not to undermine legitimate businesses in the name of regulation. If businesses are indiscriminately shut down, what happens to the workers who depend on them for their livelihoods?
The objective should be to strengthen legitimate businesses, close regulatory gaps, punish offenders and make it increasingly difficult for counterfeiters and adulterators to operate profitably.
Ultimately, consumer protection and business development should complement each other rather than work at cross-purposes.
Related News
